GST and Tax Compliance Guide for E Commerce Sellers in India

The accelerated growth of e-commerce in India has redefined the way companies sell products and services. Not only for small online sellers, even the large marketplace vendors have all been able to expand their base through digital platforms. “But where you have growth, you will also have the complexity of taxation and of compliance. GST and income tax provisions applicable to e-commerce sellers are much tougher compared with traditional business. With GSCCA, we make sure that online sellers can easily manage such regulation while staying in compliance and be sustainable.

Understanding E-commerce Under GST Law

As per GST law, an e-commerce seller is any b-person (individual or a company) selling goods / services through an ecommerce platform such as Amazon, Flipkart, Meesho, Myntra, Swiggy or on their own website. E-commerce operations are treated differently under the law as transactions involve digital goods, many states and third-party logistics and payment gateways. Therefore GST registration & compliance is from day 1, not abiding the turnover limit as applicable to offline seller.

Compulsory GST Registration for E-commerce Sellers

E-commerce regulations in India also require e-commerce sellers to get registered under GST, regardless of their turnover falling below the regular exemption limit. E-commerce sellers will have to get registered for GST before listing of goods on an e-market place. This is a national regulation across all states and disciplines, early signup is necessary. Online sellers selling through internet platforms may have some variation, but in general: – there is a requirement to register for GST.

Alternatively, if you’re a seller newly registered through GST, you’ll get a Goods and Services Tax Identification Number (GSTIN) as well which is required for invoicing, return filing and communicating with marketplaces. GSCCA helps sellers with complete GST registration from end to end to ensure there are no delays and mistakes which can hold up marketplace onboarding.

Functions of E-commerce Operators and TCS

The role of e-commerce players is very critical in GST compliance through TCS as it has the potential to alter contours of taxes in a big way. As per this model, the marketplaces will be subtracting a certain percentage of tax on the net value of all taxable supplies made by sellers and they will deposit it directly to the government. This reduced amount is credited to the Electronic cash ledger of the seller and may be utilized against GST liability.

Though the TCS enhances transparency in tax, it is giving rise to many complications for sellers with respect to cash flow, reconciliation and return matching. Correct accounting and reconciliation of TCS credit ensure no mismatches or demand notices from taxmen. GSCCA assists sellers in reconciling TCS deducted correctly and efficiently while filing GST returns.

GST Invoicing and Documentation Requirements

Correct invoicing is the foundation of GST compliance for e-commerce vendors. You are required to provide a GST complaint tax invoice (showing your details, GSTIN, HSN/SAC code rate, place of supply) for every sale. As most e-commerce transactions are between states, there is a need to determine the right place of supply for proper levy of IGST.

Sellers also have to record all their sales, returns, refunds and also any charges that are split between the marketplace as commissions, logistics cost or promotional discount in addition to invoices. Keeping tidy documentation not only makes compliance easier, it helps protect sellers when they are audited or subject to departmental review.

GST Filings for Ecommerce Sellers

Online sellers need to file a number of GST returns on the periodic basis. GST returns are filed on monthly or quarterly basis, which provides for information of outwards supplies, tax liability and input tax credit claims. Furthermore, as annual GST returns consolidate the total year’s transactions.

Accuracy in filing returns becomes critical as the date submitted by sellers, marketplaces and payment gateways are cross verified by the GST system. Small discrepancies could also lead to notices or forfeiture of input tax credit. GSCCA guarantees that sellers are prepared and filed accurately to remain in compliance and worry-free.

Tax Pitfalls of an Online Travel Business

In addition to GST, e-commerce merchants are liable for income tax laws. Income generated through trade or business on internet are liable to tax under the Income Tax Act. Sellers should also maintain their books of accounts correctly, disclose the net profit as well as value after all deductions and pay advance tax wherever necessary.

Sellers also can be subject to tax audit depending on your rate and business type. Proper income acknowledgment, expense characterization and legal tax planning are necessary to avoid penalties or minimize your tax obligations. GSCCA offers digital sellers income tax filing, audit protection and forward-looking tax planning.

Ecommerce Businesses Accounting & Expenses Management Software for E-commerce Stores.

Complex account management with E-commerce More than the number of transactions involved in e-commerce brings accounting complexity, including frequent refunds, deductions to commission fees, shipping costs and platform fees. Lacking adequate accounting systems, many sellers have difficulty determining real profitability.

Having a professional do your books lights the way on margin, tax, and cash flow. Here at GSCCA we provide an organized accounting resolution that facts marketplace stats with their income. This provides the seller constant insight to how well his or her business is doing.

Compliance Challenges and Common Mistakes

The reluctance may be caused by sellers’ awareness of, or the advice they receive from legal specialists on this issue. Common Errors are late registration of GST, wrong tax rates, mis-match in returns, failure to reconcile TCS and refunds under-processed. These mistakes can cause penalties or interest for sellers and may result in the suspension of their accounts, or legal notifications.

With proactive compliance management and oversight by experts, sellers can mitigate these risks and concentrate on furthering their business more than worrying about rules.

Why GSCCA for e-commerce tax compliance

GST and tax compliance for E-commerce Sellers involves a variety of skills, including specialist knowledge, ongoing monitoring capabilities and practical know how. GSCCA provides focused services in accounting, GST and tax compliances specifically meeting the requirements of online sellers across India. We are your compliance guide from registration and invoicing to return filing, audits and advisory for your online business.

Conclusion

An e-commerce business will not thrive on sales and marketing alone – it needs sound financials and good tax compliance. Knowing the GST rules, handling TCS, accurate filing of returns and keeping a correct record for accounts are mandatory tasks for an online seller.